RPT-LMEWEEK-Lead, zinc set for gains in 2010 - Barclays Reuters...

RPT-LMEWEEK-Lead, zinc set for gains in 2010 - Barclays
Reuters - Wednesday, October 14SendIM StoryPrint.LONDON, Oct 12 - The lead and zinc market will benefit next year from market specific fundamentals that will push prices higher even in the absence of Chinese restocking, Barclays Capital said on Monday.

The bank expects lead prices will average $2,075 a tonne next year compared with $1,698 this year as demand from the Chinese auto industry improves further while output will likely still be constrained by pollution related shut-downs.

"Lead is well set for gains," Nicholas Snowdown, analyst at Barclays Capital, said at the London Metals Exchange seminar marking the start of LME week.

"The influence of China restocking on prices will dissipate over the next 12 months but filling the gap will be fundamentals - for lead through the Chinese auto sector and pollution, for zinc through fiscal stimulus and mine supply."

Barclays expects zinc prices will average $2,100 a tonne next year compared with $1,601 this year, as Chinese demand improves thanks largely, but not only, to fiscal stimulus programmes that carry through to next year.

It also believes some global output shut downs at zinc mines could become permanent.

On nickel and tin, the bank was less optimistic, saying the two metals need to combat an emerging supply overhang, although they are set to benefit, like all metals, from a restocking and demand recovery in the OECD.

Barclays believes tin prices will average $17,250 a tonne next year versus $13,788 this year, while nickel will average $21,500 next year versus $14,968 this year.